DLMM Liquidity Provision Strategy
When to Use
- •Opening new DLMM positions
- •Rebalancing existing LP positions
- •Analyzing bin distribution
- •Evaluating pool APR opportunities
Key Principles
1. Bin Width Selection
- •Majors (SOL, ETH, BTC): Concentrate within 2-5% of current price
- •Stablecoins: Tight bins, 0.1-0.5% range
- •Volatile memecoins: Wider bins, 5-15% range
- •New tokens: Start wide (10%+), tighten as volatility stabilizes
2. Entry Criteria
- •Volume/TVL ratio > 0.3 (indicates active trading)
- •24h fees > $1000 (ensures meaningful yield)
- •APR between 50-500% (too high = red flag)
- •Bin step appropriate for asset volatility
3. Warning Signs
- •APR > 1000% usually means low liquidity or high IL risk
- •Volume/TVL ratio < 0.1 = dead pool
- •Large price gaps between bins = manipulation risk
- •Single-sided liquidity = impending dump
4. Position Sizing
- •Max 20% of domain balance per position
- •Split across 2-3 pools for diversification
- •Never more than 3 active DLMM positions
Rebalancing Rules
When to Rebalance
- •Price moves >50% outside your concentrated range
- •APR drops below 30% of entry APR
- •Better opportunities emerge in same pair
When NOT to Rebalance
- •Price temporarily spikes (wait for stability)
- •Gas costs exceed expected gains
- •Within 24h of opening (let position settle)
Checklist Before Adding Liquidity
- • Pool TVL > $100k
- • 24h volume > $50k
- • APR realistic (50-500%)
- • Bin step matches volatility
- • No recent rug signs on token
- • Position size < 20% of balance